Wed | Sep 20, 2017

Walter Molano | Demise of the Latin left may be exaggerated

Published:Friday | April 29, 2016 | 4:00 AM
President of Argentina, Mauricio Macri, is of the right wing
Dilma Rousseff, president of Brazil, is to the left.
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Pundits are proclaiming the death of the political left across Latin America.

The presidential election of Mauricio Macri, the right-wing mayor of Buenos Aires, and the ongoing impeachment proceedings against Brazilian President Dilma Rousseff have been used by the talking heads as evidence that the left is in demise.

At the end of last year, AndrÈ Radzischewski of the Washington Post wrote a lead article titled 'South America's Leftist Governments Losing Grip on Power After Years of Dominance'. The strong showing by the opposition parties in the Venezuelan congressional elections seemed to prove his point.

However, it may be premature to write off the political left. Most signs show that it is alive and lurking just below the surface.

A case in point is the unexpected rise of Peruvian presidential candidate Veronika Mendoza. A graduate of the New Sorbonne University in Paris, she became the voice of the radical left in Peru. While in Europe, she joined President Ollanta Humala's Peruvian Nationalist Party. She ran for office upon her return and was elected to Congress in 2011.

Mendoza championed environmental causes and gained notoriety after last year's violent clashes between opponents to new mining operations and the police. Up to a few months ago, the presidential slate was comprised solely of pro-market candidates. However, she surged in the polls on the eve of the elections, as Peru prepared to bring a slew of controversial mining projects on line.

She is a close associate of President Humala's politically ambitious wife, and she claims that she felt betrayed by the president's pro-market policies.

Humala was once a close associate of former Venezuelan President Hugo Chavez, but he tacked away after he took office by adopting a neo-liberal approach.

A Mendoza presidency is not in the cards in 2016, but her rapid ascent confirms that the political left is still a formidable force in Peru.

Colombia is another country that is about to witness a leftist revival. A key element of the peace talks is the reintegration of the radical left into the national political framework. The various guerrilla groups will soon be able to field electoral candidates, giving them a much louder voice in the political system.

Chile's story

Chile remains firmly in the hands of the left, with President Michelle Bachelet enjoying her second term in office. The Chilean head of state recently voiced her support for Brazilian Dilma Rousseff and, unbelievably, opined that she was an "honest and responsible person".

Meanwhile, in Mexico, former Mexico City mayor and staunch leftist politician, Andres Manuel Lopez Obrador, called AMLO, is leading the pack for the 2018 presidential elections. While Mexico has traditionally been led by centre-right and right-wing governments, an AMLO presidency would take the country in a completely new direction.

Therefore, it is grossly premature to proclaim the demise of the political left in Latin America. In a region with such rampant poverty, socialist values will always have a great deal of appeal. Even in Argentina and Brazil, the political left could easily stage a comeback.

The polling data shows that President Mauricio Macri continues to enjoy very strong support, but the brutal rise in utility costs, as well as the pass-through effects of the devaluation is stirring up a lot of anger. To make matters worse, the government's bumbled response to the release of the so-called Panama Papers is eating away at the president's image.

Same troubles in Brazil

The same is occurring in Brazil. Although the PT is undergoing a process of self-immolation, the PMDB and PSDB are also going through their own share of troubles. The Lava Jato scandal was pervasive throughout the Brazilian political system, and senior members of both parties are implicated.

The president of the Senate, Renan Calheiros, connected to the PMDB, and the president of the Lower House, Eduardo Cunha, also of PMDB, were named in the investigations. Testimony made to the federal police showed that even former President Fernando Henrique Cardoso of PSDB and presidential hopeful Aecio Neves, also of PSDB, were involved.

Therefore, it is hard to imagine that the political right will emerge unscathed. In reality, the political pendulum never swung as far to the left as many pundits argued, nor did it swing as far to the right as many hoped.

Given that Latin American governments tend to generate a great deal of the revenues from commodity royalties, the surge in raw material prices created an environment that was conducive to the left's redistributive policies.

However, the collapse in commodity prices led to a wave of public disillusion as the redistributive programmes thinned out, leaving heaps of waste, abuse and corruption in plain view. Their subsequent fall from grace allowed the political right to move into place. However, this should not be construed as a shift in ideology. It is more of a natural response to changes in the international economic environment.

Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.

wmolano@bcpsecurities.com